Wednesday, April 26, 2017

The Indian aviation industry has seen passenger traffic over the two successive months of February and March dip to 15 percent as compared to the earlier 20 percent-plus growth figures.

While February reported a year-on-year (y-o-y) growth of 15.77 percent, the passenger traffic growth in March (y-o-y) was lower at 14.91 percent. In January, passenger traffic recorded a 25.13 percent growth which was a continuation of the 23 percent-plus growth rate that was reported in calendar year 2016.

A report by ICICISecurities points to the fact that domestic airlines might not be sacrificing their yields for higher passenger load factors (PLFs). “Total PLFs lowered to 82 percent, and after eight months, the capacity growth surpassed the passenger growth during March. The connecting underlining theme is that of a possible conscious choice of airlines to resist sacrifice in yields,” read the report.

The ongoing fourth quarter earnings season would indicate if airlines have chosen yields over passenger growth. While there is no empirical data on whether there has been a significant rise in air fares over the last two months, what is known is that the price of jet fuel has been on the rise as a consequence of the rise in global crude oil prices over the last 12 months.
26/04/17 Anshul Dhamija/Forbes India